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will we always be up for capital gains tax if we then sell it in the future?
We bought our house over a year ago and we're tossing up the possibility of moving away for a couple years and renting it out. We plan to move back here and live in the house again for a while/long time. If we then sold it in the future would we have to pay capital gains tax because it was rented out for a while, or does that become negated by the fact that returned it to our place of residence?
From my vague recollections when the tax accountant explained it to me, the capital gains thing only kicks in after a certain amount of years (10 years, I think, don't quote me on that) and if you move back in before the ten years it cancels it out. Also you have the house valued at the start of the capital gain period (like, at the 10 year mark) so the gain you pay is only on the increase in value from that time (and not when you first bought it).
It's worth getting some advice from an accountant before you proceed to clarify all of this.
Ahh- that all makes sense and helps to give me some idea of the possibilities. Thanks marydean :D
We will absolutely have to look into the whole thing better if we do end up moving so I think a trip to an accountant would be in order.
Meow - I think you're right. I dont think you have to pay CGT on a property that is your primary residence, even if you rented it out for a couple of years. MD is probably right about the 10 year thing. But I'm not 100% sure.
We have our house rented out while we are residing overseas and we do have to pay Land Tax on it while we aren't residing in it, but don't think we'd have to pay CGT on our primary residence - we don't have any other property and it is our intention to move back into it after a couple of years. You probably would only have to pay it if it was a long term Investment Property.
We recently moved out of our main residence and into an investment property we bought for a few years and then moved back "home" again. I was worried about this too but my accountant explained that it is alot to do with why you are doing things as well as the length of time you have been in your primary residence. Definitely worth going to an accountant as I don't think there is any black and white rules for this.
You have 6yrs CGT free exemption, provided you don't own another PPOR in that same period. So you have six years after moving out and renting your house out to sell without inncurring CGT, but you are not allowed to have ownership of more then one house which you are claiming as your Principal Place of Residence for CGT purposes at any one time (although there is an exception if you sell your house within 6months of purchasing the new residence)
Just thought I would add, you can move back into your house before the end of the 6yr period and then the six years resets from when you move out again - provided you don't have any other PPOR for CGT purposes during any of that time period. ;)
Thanks so much for your help!